AfDB okays $15m investment for Nigeria’s credit firm

Posted on
April 15, 2019

The African Development Bank (AfDB) at the weekend approved $15 million investment package to Infrastructure Credit Guarantee Company (InfraCredit), to support infrastructure financing through the domestic debt capital markets in Nigeria.

The bank said the investment package comprise a subordinated loan of $10 million and a risk sharing facility of up to $5 million. This intervention will promote local currency infrastructure financing, and further development of the domestic capital market.

InfraCredit is a specialised infrastructure credit guarantee company, established to enhance local currency debt instruments – mainly bonds, to finance eligible infrastructure projects in Nigeria. It is intended to uplift the credit rating of such bonds, allowing institutional investors to include them in their portfolios.

InfraCredit was founded by the Nigerian Sovereign Investment Authority (NSIA) in collaboration with GuarantCo (part of the Private Infrastructure Development Group). These initial investors have been joined by the Africa Finance Corporation (AFC) and KfW, the German Development Bank.

The AfDB’s investment in InfraCredit will catalyse local institutional investor funds, including pension funds, into financing long-term infrastructure projects through the local bond markets. The investment will boost InfraCredit’s qualifying capital base through the subordinated loan; it will also improve its capacity to expand its guarantee business through the proposed risk sharing arrangement.

Through this intervention, the bank is helping to stimulate local currency financing across diverse infrastructure transactions, thereby improving economic diversification and competitiveness, as well as promoting more equitable growth, strengthening local value chains and financial markets in Nigeria. InfraCredit’s operations will catalyse infrastructure investments in critical sectors such as renewable energy, housing, transportation, agricultural infrastructure, and telecommunications, which are critical for the country’s economic development. These also align with the Bank’s High 5 agenda.